Efficient Market Hypothesis: Understanding and Acceptance in India

Ramesh Bhat () and Indra Pandey

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: Inspite of some empirical evidence in favor of the capital market efficiency in weak form and mildly in favor of semi-strong form, the capital markets participants allege that the market is excessively speculative and inefficient. The objective of this study therefore is to assess the extent of the users and preparers of accounting information in India are aware of the efficient market hypotheses (EMH) and accept the empirical findings on EMH in the Indian context. The research methodology used is he one developed by Mayer-Sommer. A questionnaire was sent to 600 preparers and users who were divided into four groups: (1) the chief financial executives; (2) academicians; (3) chartered accountants; and (4) cross-section of investors and brokers. One hundred and sixty questionnaires were returned duly filled in by the respondents. The analysis reveals that the various-category respondents deny the existence of market to be efficient in any of its three forms. It is important to note these findings relate only to attitudes and perceptions in the understand ing acceptance of EMH.

Date: 1987-07-01
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